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Standard and Poor's said it had upgraded its rating for Geneva Finance to CCC from CC after debenture holders voted for a NZ$23 million equity injection plan on Monday, but that it had kept the outlook on negative given a challenging economic environment for finance companies.
"The negative outlook reflects our view that over the next two years, economic and operating conditions will become more challenging for the finance sector including Geneva," Standard & Poor's credit analyst Sharad Jain said.
"In addition, the closure of most of Geneva's branches means that it has reverted to being a mainly centralized business. This change has resulted in a number of one-off material losses over the past several months," Jain said.
"Consequently, a return to profitability has yet to be proven and the company will need to manage its operations, cash position, and banker relationship carefully. The rating could be lowered if credit conditions or financial performance does not improve significantly or if Geneva's banker withdraws its support."
Geneva Finance's banker is BoS International.
- INTEREST.CO.NZ
